The Week Just Past
"Barack Obama delivered his first budget to Congress on Monday -- an historic act for a new President. But this budget is one for the history books for other reasons: it spends more than any other budget in history, creates the largest budget deficits in history, which will result in the largest tax increase in history.
"You will find some details of the spending plan below, but suffice it to say that both the size of the budget - $3.8 trillion -- and the size of the deficit - $1.6 trillion -- are unacceptable. The President's three year partial spending "freeze' is more symbolism than substance. It is not sufficient and Democrats and Republicans should be working together to go over this document line by line to root out waste and unnecessary spending.
"This budget spends too much, borrows too much and taxes too much. In my view, this bloated, unbalanced budget request should be rejected by Congress.
"And as if to put an explanation point on this lack of fiscal responsibility, the House approved a bill Thursday to boost the debt limit from $12.4 trillion to $14.3 trillion. The 15 percent increase would be the third such raise since February 2009! I voted "no'."
The President's Budget Arrives With a Thud
The White House released the President's budget for fiscal year that begins on October 1. The budget spends $3.83 trillion and contributes to a record deficit of $1.6 trillion this year.
Debt: The President's budget would dramatically increase the National Debt, more than doubling the public debt from $7.7 trillion today to $18.57 trillion in 2020. Under the President's budget, from today until the end of 2010, public debt would rise by $1.53 trillion or 20 percent. By 2020, the public debt would be 77.2 percent of gross domestic product (GDP), the highest total since just after World War II. By contrast, under current law, public debt would be $15.02 trillion in 2020, meaning the Obama Administration's budget would incur $3.6 trillion more in debt than actually doing nothing. When President Obama took office in January, 2009, the Congressional Budget Office estimated that the public debt in 2019 would be $9.3 trillion.
Deficits: Under the President's budget, the FY 2010 deficit will reach a record high of $1.556 trillion or 10.6 percent of GDP, which is $143 billion or 10.1 percent larger than last year's record deficit. Over the next ten years, annual deficits average $917 billion every year--twice as high as FY 2008's then-record deficit of $458 billion.
Tax Increases: The President's budget would also increase taxes by a record $2.308 trillion over ten years. The budget increases a broad range of taxes that would affect every taxpayer, including:
* $969 billion in tax increases by allowing the 2001 and 2003 tax cuts to expire for individuals earning above $200,000 (single) or $250,000 (married). This includes a provision limiting tax deductions on charitable gifts to 28 percent, which one formula has estimated could decrease private charitable donations by $9 billion a year!
* $743 billion in new taxes associated with a government takeover of health care!
* $122 billion in higher taxes related to changes in the U.S. international tax rules and enforcement!
* $90 billion in tax increases imposed on financial institutions, referred to as a "financial crisis responsibility fee."
* $59 billion in tax increases associated with the repeal of "last-in, first-out" inventory accounting practices.
* $39 billion in increased taxes related to the repeal of tax credits for the production of natural gas, oil, and coal fuels.
* $24 billion in tax increases on carried interest, doubling the tax rate from 15 percent to 39.6 percent.
* $262 billion in additional, miscellaneous tax increases over the next ten years.
Recommended Reading: Gerald Seib in Tuesday's Wall Street Journal: "Deficit Balloons into a National Security Threat."
The Price Tag for Importing Guantanamo Terrorists Keeps Rising
The President's budget released this week includes $237 million for the federal government to purchase, modify, and operate the Thomson Correctional Center in Illinois, where the administration is planning to transfer the detainees currently at Guantanamo Bay, Cuba.
Of course, this is on top of the $500 million the federal government has already spent to renovate, upgrade and operate the Guantanamo Bay facility as a "state of the art" detention facility.
Recommended Reading II: Rodney Frelinghuysen, in Thursday's Daily Record of Morris County, "We Need No More Wake Up Calls" :
Recommended Reading III: Henry Kissinger in Wednesday's Washington Post, "Iraq can't be an afterthought":
Administration Support for Our Port Keeps Dropping
The President's budget shortchanges the ongoing Port of New York and New Jersey harbor deepening project. For years, the Army Corps of Engineers has been working to dredge the main shipping channel of the Port to a depth of 50 feet, allowing access by the world's largest ocean-going vessels.
The Corps says it needs $107 million to keep the project moving forward on schedule. Yet, the President's budget includes only $57 million, far short of the $90 million the House and the Senate approved last year.
"The Port of New York and New Jersey, the third largest port in the nation, has been the engine that has kept our region's economy moving providing almost 300,000 jobs and over 70 billion dollars of commerce a year," Rodney said. "Increasing the depth of our harbor has opened doors for more goods to be moved in and out. This proposed funding shortfall will do serious damage to our economy and our efforts to create private sector jobs!"
"In light of the Administration's stated desire to stimulate and sustain our economy through "shovel ready' projects, this critically important dredging work should be one of highest priorities," he said.
Completion of the Harbor Deepening Project will improve transportation efficiency and benefit the markets served by this critical port, as well as increase the nation's defense capability as a National Strategic port. As such, Rodney supports shifting funding from less vital Army Corps projects to the harbor deepening program, which has been a project of "National Significance" since September 11, 2001.
Rodney serves as the Ranking Member on the House Subcommittee on Energy and Water Development. He has pledged to work with other members of the New Jersey-New York delegation to "do everything we can to restore these funds" by targeting existing, less vital, funding elsewhere in the budget.
"Clearly, Washington needs to tighten its belt. But if the President is looking for areas to protect and create jobs by funding "shovel-ready' projects, moving forward with the harbor deepening is a "no brainer.'"
Recommended Reading IV: C. Fred Bergsten in Wednesday's Washington Post: "A clear route to recovery: Exports":
Recommended Reading V: Sunday's lead Washington Post editorial: "The jobs job":
And They Want to Pass Another "Jobs Bill"???
The $700 billion bailout program for the financial industry has so far done little to boost bank lending, aid small businesses or reduce home foreclosures, according to a top government watchdog.
Neil Barofsky, the special inspector general over the Troubled Asset Relief Program (TARP), said in a recent report that while the bailout has helped stabilize the financial system, many of the program's original goals have not been met.
"Lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending -- announced in March 2009 -- has still not been implemented by Treasury," Barofsky wrote. "The TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation."
Recommended Reading VI: Louise Radnofsky and Corey Boles in Monday's Wall Street Journal: "Latest Stimulus Report Fuels Jobs Pressure":
Recommended Reading VII: Charles Duhigg in Tuesday's New York Times: "Weight of a Bubble, Fannie and Freddie Complicate Election-Year Politics":
Good Idea of the Week: Pequannock Valley School
Eighth-graders of the Pequannock Valley School, a middle school Rodney visited on Monday, all have individual "community" projects they are using to raise money and awareness for earthquake victims in Haiti, combating steroid abuse, cleaning-up the environment and promoting research on various types of cancer.